Execute Sports net Sales for the first quarter ended March 31, 2006 were $595,534 compared to $639,610 last year, representing a $44,076, or 7% decrease. The three month year-over-year decrease is due to the discontinuation of its motocross business line offset by increased sales from the EagleRider apparel program.
Gross margin for the three months ended March 31, 2006 and 2005 was $117,592, or 20% and $213,826, or 33%, respectively. The $96,234 decrease in gross margin over the previous year was primarily due to higher raw materials prices for rubber products as a consequence of rising oil prices, a reduction in selling prices to a key account as an adjustment for deferred freight charges, substantial purchase orders from a key account were not received in the first quarter as in the previous year which were received in the second quarter, and higher costs due to our inability to purchase goods in larger quantities.
Selling, General and Administrative expenses for the three months ended March 31, 2006 and 2005 was $932,976 and $197,761, respectively, representing a $735,215 increase. The year-over-year increase was the result of increased costs due to the Pacific Sports Group Acquisition, an increase in stock based compensation for professional services and key employees, increased professional costs related to being publicly traded, and higher sales and marketing costs compared to the same period in the prior year.
Net loss for the three months ended March 31, 2006 and 2005 was $824,621 and $4,382, respectively, representing an $820,239 increase in the net loss from the same period last year. The three month year-over-year increase in net loss is due primarily to increased operating costs described above.
